Sangita Manek is a partner in the dispute resolution team at Blaser Mills Law
Throughout the current crisis, many residential tenants have been unable to pay their rent in full and have found themselves in substantial arrears, and the government has urged landlords to show support and understanding for any tenants facing hardship.
You have the right as a landlord to request rent arrears from your tenants, but it is important to bear in mind that their employment and income may have been significantly impacted by the pandemic.
Whilst the situation is constantly evolving, here are some of the main things you can do now to deal with a tenant who is struggling to pay their rent during the Coronavirus pandemic.
Keep a record of all payments
It is important to keep a record of when rent payments are due and when they are paid, as well as to send receipts to your tenant each month, noting the date rent was paid and the time period it refers to. You can also outline the amount that is still outstanding.
Doing this is particularly useful when you have multiple tenants occupying a single property who pay their rent separately, as you can easily see who has not paid.
If you have agreed reduced payments with your tenant at any point during the pandemic, it also helps to outline how much rent from this period remains to be paid, so the tenant can clearly see how much they owe in arrears.
Get in touch with the tenant and guarantor
If a tenant has fallen behind on their rent payments, call them to discuss their arrears. This may help you understand if their financial situation has changed, as well as any other reasons why they may be behind on payments. In line with government guidance, try to offer understanding and discuss other payment options where possible.
If you agree with your tenant that they are to begin paying back the arrears they have built up, you should send a letter to request the outstanding funds, outlining when you would like them to be paid by.
If your tenant does not respond, you should explain that unpaid arrears could result in court action being taken against them later.
If you have not received the outstanding rent within 14 days, with no valid reason, get in touch with your tenant’s guarantor to advise them that the tenant has not paid their rent according to their tenancy agreement.
Keeping an open dialogue with your tenant is the best thing you can do to deal with rent arrears and is often the quickest and cheapest way to resolve issues.
Think about introducing a repayment plan that takes your tenant’s circumstances into consideration and agree not to take possession action, or alternatively settle on a plan to pay off arrears at a later date. Look at your tenant’s employment and income in relation to the pandemic and create a plan that is realistic to what they can afford.
Issue a section 8 notice
If you are unable to reach an agreement with your tenant and wish to take legal action, issuing a section 8 notice is the first step you must take to evict them and seek possession of your property. The validity of a section 8 notice remains unchanged by the Coronavirus Act 2020, however new notice requirements have been introduced which are valid until 31st March 2021 depending on the circumstance. In most cases you must provide tenants at least six months’ notice before you acquire possession.
However, those who have fallen into serious rent arrears at time of service of notice will be served four weeks’ notice if their arrears are at least six months.
Since 21st September 2020, the courts have resumed considering possession cases. However, the judiciary have decided that the most serious cases are to be actioned first, meaning priority will be given to claims issued before March 2020, and to cases dealing with anti-social behaviour, extreme rent arrears equivalent to nine months’ rent, domestic abuse and fraud.
Although the government is encouraging landlords to consider all other options to resolve disputes with tenants before taking possession action, you still have the legal right to do so. However, you should be aware that the process may take longer than normal.
If you are seeking possession because your tenant is suffering financial difficulty due to the pandemic, you should draw attention to your claim by marking it as ‘COVID-19’. The court will require you to provide information as to why it has been marked in this way before they consider it.
If you do plan to seek possession, under the Coronavirus Act 2020 you must also provide six months’ notice to your tenant in most circumstances.
As a landlord, you are also entitled to draw down on any deposit to assist cash flow for all covenants, not just rent arrears. However, the deposit must be replaced as soon as possible if used.
You may also contact your lender for a mortgage payment holiday if you are a buy-to-let landlord and your tenant has stopped paying rent. This will help if you are struggling to make your mortgage payments as a result of your tenant falling into arrears.
Seek legal advice
If your tenant has fallen into arrears and you are unsure about the best course of action to take to receive unpaid rent, speak to a reputable, experienced lawyer who will be able to advise you on your individual circumstances.
They will also be able to help you with issuing a section 8 notice, applying to the court for a possession order and drafting letters to tenants to inform them of their rent arrears.
Justin Malonson is the Founder of LyfeLoop a 16+ year tech innovator, investigative media researcher and host of the Freedom Not Control Podcast live on Voice America. Justin is a highly sought-after tech entrepreneur, industry speaker and winner of the coveted Business Achievement Awards “Top Digital Marketer” award. With 16+ years of demanding experience, Justin has worked with over 3,000 businesses including amazing clients such as Blue Cross Blue Shield Association, Sotheby’s International Realty, Duke University, White House Black Market,Tiffin Motorhomes, Bass Pro Shops and Beazer Homes USA.